12th Jun 2006 07:02
Workspace Group PLC12 June 2006 WORKSPACE ANNOUNCES DEVELOPMENT JOINT VENTURE Workspace Group PLC ("Workspace"), the leading provider of flexible businessaccommodation to small and medium sized enterprises in London has announced thatit has formed a joint venture with Glebe, a private property developmentcompany, founded in 2004 by ex Chelsfield Director David Phillips. The joint venture, in which Workspace will have a 50% equity share, will promotethe redevelopment opportunities for a number of properties contributed to thejoint venture by Workspace and Glebe. Under the terms of the agreement Workspaceand Glebe are contributing £20.0 million of equity each into the joint venture.Non-recourse debt financing of £126 million has been provided by Bank ofScotland Corporate. Initially, Workspace is selling a portfolio of eleven properties into the jointventure for a cash consideration of £146 million. This represents a surplus of£8.6 million over the book value at the last external valuation in March 2006 of£137.4 million. The properties are all located within Greater London and have acombined lettable area of 1.2 million sq ft and have a passing rental income of£7.2 million. The joint venture has also agreed to buy three properties fromGlebe for a consideration of £9.1 million. Workspace will continue with theday-to-day management of the properties, whilst Glebe will apply its expertiseto deliver change of use, extension and redevelopment projects. Workspace's core business is investing in and managing property let to SMEs. In2005 the Group reported that up to 45% of its portfolio had the potential to addvalue through improvement initiatives. The joint venture enables the group tocrystallise a portion of the value of its current portfolio and retain its focuson its key skills areas whilst retaining a significant interest andparticipation in the gains from development. Profits on the joint venture willbe shared 55:45 in favour of Workspace (in respect of the original Workspaceproperties). Workspace and Glebe will continue to source and acquire propertiessome of which may be injected into the joint venture. The use of a leveraged, ring-fenced development vehicle will enable Workspace tomaximise returns. Workspace will receive net proceeds of £123.2 million which it will use forgeneral corporate purposes and to pay down debt. Workspace was advised by Rothschild. Harry Platt, Workspace Chief Executive commented, " This a major step for Workspace. This partnership with Glebe will accelerateour programme for releasing further value from our properties, by drivingthrough alternative uses or through re-development. I believe that ourassociation with Glebe will add value to our business by expanding our scope ofactivity using their skills and expertise." " Our core business remains investing in and managing property that is suitablefor letting to SMEs. This is where our key skills lie. Our market place is huge.There are over 150,000 SMEs in the capital and we are tracking many propertiesthat meet our acquisition criteria. They all have the potential to improveincome and capital growth performance through our style of active management." David Phillips, Chairman of Glebe commented: " We are very pleased to be in partnership with Workspace and believe there issignificant potential to be extracted from this group of London assets. Ourcomplementary skills and extensive experience will realise added value for bothparties, and we intend to grow this joint venture into a major part of ouroverall business." -ends- Date: 12 June 2006 For further information contact: Workspace Group PLCHarry Platt, Chief ExecutiveMark Taylor, Finance Director020-7247-7614e-mail: [email protected]: www.workspacegroup.co.uk GlebeDavid Phillips, Chairman020-7409-3741e-mail: [email protected]: www.glebe.com RothschildAlex MidgenRobert Waddingham020-7280-5000 cityPROFILESimon CourtenayAndrew Harris020-7448-3244 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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